Jun 21, 2018 | European Economy
While we don’t want to get drawn into the Byzantine world of Italian politics, we do have a thing or two to say about bond markets. What has struck us the most about the Italian bond market has been the degree of volatility in BTPs and drop in liquidity. The first...
Jun 1, 2018 | European Economy
On the back of signs that Germany and the eurozone are slowing, we highlight the risk of a drawdown in Polish economic growth. Although Poland is ostensibly a domestic demand-driven economy, it is still highly trade dependent (exports + imports are above 100% of GDP)...
May 3, 2018 | European Economy
Since we highlighted the potential of CE3 markets in July 2017 in light of the global reflation trend, our preferred trade – short EURCZK – has made a modest 2.8%. Even after this relatively anaemic rally, we believe that the koruna will now take a breather. As a...
Jan 19, 2018 | European Economy
Sentiment in Europe has soared to its highest level since 2001. However, in Europe as elsewhere, such lofty sentiment should be taken as a warning for markets, not a green light. As we can see from the top-left chart, previous peaks in economic sentiment have...
Jan 11, 2018 | Emerging Markets, European Economy
On a structural basis, Turkey has consistently been one of the most vulnerable economies to a currency crisis in light of considerable external vulnerabilities, and was flagged again in VP’s September thematic update of our debt and currency crisis framework. However,...
Dec 14, 2017 | European Economy, US Economy
Real rate differentials continue to suggest EURUSD has more downside. We have two ways of looking at real rate differentials. The top left chart shows the 2 year rate differentials deflated using CPI. The top right chart takes the same data but also divides the real...
Oct 9, 2017 | Emerging Markets, European Economy
Rate differentials are a key driver of FX moves, and we look at rate differentials by adjusting for the effects of both inflation and embedded risk in the market. We do this by looking at 2y nominal-rate differentials, adjusted for CPI and then divided by the implied...
Sep 29, 2017 | European Economy
With a synchronised recovery in economic activity underway, memories of the 2015-2016 deflation shock fading and a slew of benign election results (Dutch, French and German), confidence in the euro area has improved markedly since the beginning of the year and has...
Aug 13, 2017 | European Economy
Convergence in core-periphery sovereign credit spreads since 2012 would seem to vindicate the raft of monetary easing measures deployed by the ECB to stabilise the eurozone. This is only half the story, and the other half is decidedly negative. The eurozone collapse...
